Small and online businesses that require fast financing for their business to grow consider choosing merchant loans as their primary source of working capital. These are also known as Merchant Cash Advance (MCA) and this type of funding option make a great alternative to finance your business for necessary expansion and overall growth.
What are merchant loans?
Merchant loans are a type of alternative funding option that provides fast and easy working capital to an active small business. In this type of cash advance, businesses are provided with working capital in exchange of a percentage of their future credit or debit card sales. A lot of small businesses may require Merchant Cash Advance to meet the varying needs of their business. In such a scenario, Merchant Cash Advance helps them because the working capital can be used for a wide variety of business requirements whether it is fulfilling payroll, purchasing new equipment or supplies, growing inventory, expanding or renovating the business, advertising or marketing, paying rent, or anything else that a business owner may see fit.
Merchant loans have a very easy application procedure and do not have much eligibility conditions. This means that if you have bad or little credit or do not have any credit to show, you can still get a Merchant Cash Advance for your business, unlike traditional business loans. In fact, it is really helpful for those small businesses that have strong sales. When you receive capital for your small business at the right time, your small business can reach success. Traditional lenders, like banks, do not provide small business loans to businesses that have a bad or poor credit score. This is because such companies are considered too risky by the loan providers therefore, such companies have to face a tough time to secure a traditional business loan to meet their business needs. Many online or small businesses are unable to sustain their business because of this since they cannot get the capital to produce goods, operate their business, or purchase extra inventory. In such a case, merchant loans come in handy by providing quick capital to small or online business owners. This allows small business owners to smoothly run their everyday operations.
Benefits of Merchant Loans
There are a lot of benefits of merchant loans as compared to traditional small business loans. Let us have a look at some of the advantages of choosing a Merchant Cash Advance.
No perfect credit required
A merchant cash advance does not necessitate a perfect credit score, unlike traditional business loans. This is a major cause why small businesses are unable to get a traditional business loan. Due to swings in the economy, small business owners are the ones that have to suffer the most, which can result in low sales and bad credit. This hinders small businesses from getting a loan in order to sustain their business since they have a bad credit score.
Since merchant loans are offered in return for future credit card or debit card sales, they have high chances of approval with little or no requirement of credit scores. This is a plus for many struggling small business owners.
No collateral requirements
Unlike traditional bank loans, Merchant Cash Advances do not require any collateral. Instead, they are offered on the basis of the past credit card sales of a business. Therefore, if you have a strong sales record, then you can certainly be approved for a Merchant Cash Advance.
Very less paperwork
Merchant loans have almost no paperwork since everything is done online. As opposed to traditional business loans that require a lot of paperwork, Merchant Cash Advances do not come with formalities in the form of fax, mail, or scan. This diminishes the overall time in which you receive your funds and thus allows you to receive your money much faster.
High approval rates
Merchant loans have high approval rates since they do not carry many eligibility rules. This helps struggling small and online business owners to get quick capital within a few hours only. So, if you are unable to get a traditional loan from banks or other lenders, then you can opt for a Merchant Cash Advance for getting the capital you require.
Access to quick cash
Merchant loans are great for getting access to funds in a quick manner. A Merchant Cash Advance does not take much time to process your application as compared to traditional bank loans. Moreover, you can get capital or cash from a cash advance as quickly as within one hour of your online application submission. This is a great thing for small business owners, who do not have time to go through a lengthy loan process that is typical of large lenders and banks.
No fixed repayments
Merchant Cash Advances do not carry a set monthly amount as repayment, which makes it quite hassle-free down the road. This helps your small business to grow, especially if the sales of the business are slow in the beginning.
Merchant Cash Advances work on a fixed percentage of your business sales, instead of a fixed repayment amount that you need to give every week or every month. For instance, if you receive a Merchant Cash Advance of $10,000 and in return, they charge 10% of your monthly credit card sales, then automatically they will get the repayment amount of the first month, along with a percentage of the monthly sales of your business.
So, if the credit or debit card sales in the first month after you receive the Merchant Cash Advance is $1,500, then $150 will automatically be deducted from your business account. And, if in the second month, you only completed credit card sales of $900, then only $90 will be deducted from your account and not a fixed amount of money.
So, these are the advantages of opting for merchant loans, which are perfect for small businesses. They do not have a fixed repayment amount and do not come with specified interest rates that are found in traditional bank loans. They just work by amassing a percentage of the total credit sales of a business every month. Consider choosing a Merchant Cash Advance loan today!